Case Analysis

BUS 4476 – Strategic Management

Sturm, Ruger & Company

Son Vu – 6210

Date (local) Submitted

Sunday, April 18, 2021

Vision: Sturm, Ruger & Co., Inc. is one of the nation's leading manufacturers of rugged, reliable

firearms for the commercial sporting market.

Mission: “arms maker for responsible citizens”.

The company's vision and mission provide a clear direction of the company's position in the market, and

reflect the corporate social responsibility. However, more focus should be on the side of social

responsibility.

2. External environment to identify threats and opportunities, concern if you were a shareholder?

Threats:

- Law: the gun industry in the United States is subject to strict regulations. Such laws may prohibit all

firearms, ammunition or ammunition from being sold in their respective jurisdictions.

- Politics: the performance of firms in this industry can be heavily influenced by political factors. For

example, when a new party introduces power policies that can be changed, something worse could lead

to policies banning the possession of guns.

- Social: This is also a challenge for this company. Shooting incidents increased, coverage increased,

leading to increasing public concern about the safety of shootings. When struggles, public opinion

breaks out, will adversely affect the company.

Opportunities:

- The company has invested heavily in Research and Development, innovating technical design to

reduce production costs, bring growth to businesses, and create a great competitive advantage for

businesses in the same industry. This has created great opportunities.

- Another opportunity is to become a member of the National Rifle Association (NRA). The NRA has

had a great influence on US gun law and policy, the company that is part of the NRA will have a huge

advantage over political law, and at the same time, will have demand and changes in market demand.

If I were a shareholder of Sturm, Ruger & Company, the threat that worries me the most is Social.

Social factors are linked to society and people, if not well controlled, can lead to a fight against the use
 of guns, which can lead to business shutdowns. In addition, the gun business also carries many risks

because, when there is something bad related to the shootings, the company's stock price may drop, this

is also something shareholders should be concerned about when first investment in business.

3. SWOT analysis in bullet formatting.

Strengths

 The company invests in research and development continuously, generating new revenue

streams, generating a good return on capital expenditure.

 The company has a diversified product portfolio that allows targeting multiple segments of

the market, generating diversified sources of revenue and profit.

 Market first-mover advantage and quality has been confirmed.

 The strong distribution network that Sturm, Ruger & Company, Inc. Has been built.

 Reliable suppliers - It has a solid foundation of reliable raw material suppliers, thus allowing

the company to overcome any supply chain bottlenecks.

Weaknesses

 Need to invest more in new technology with an expanded scale and different geographic

areas the company is planning to expand.

 Marketing of products still has many difficulties, as this is a sensitive industry.

 Ruger financial results show that the company did not meet investor expectations for

earnings per share and sales.

 The rate of return of Sturm, Ruger & Company, Inc. are well below the industry average.

Threats:

 Being subject to the strict control of the law, is one of the most challenging things in this

industry.

 Political factors are one of the major challenges for Sturm, Ruger & Company.

 Social factors are a huge threat to this industry.

 New entrants threats for reduced costs and increased efficiency.

Opportunities
  The company that is part of the NRA will have a huge advantage over political law, and at the

same time will be able to anticipate demand and changes in market demand.

 Opportunities in Adjacent Markets - Ruger Sturm can explore adjoining industries for further

market growth, in particular by expanding the features of existing products and services.

 The Changing Technology Context, companies can use these developments to improve

efficiency, reduce costs, and convert procedures.

4. Porter’s Five Forces model.

 Threats of New Entrants (Moderate): New companies enter the market through lower cost, cost

reduction strategies. So companies must manage all of these challenges and build effective barriers

to protect their competitive advantage.

 Bargaining Power of Suppliers (Moderate / Weak): there are many raw material suppliers in this

industry, however the large suppliers have a negotiable advantage for price advantage.

 Bargaining Power of Buyers (Moderate/ Weak): in this industry there is not too much

competition, but the online market will give customers the advantage of finding prices, which is a

challenge that requires good sales strategies from the company.

 Threats of Substitute (Weak): emerging products in the industry are not much, and the company is

constantly investing in the research and development of new products.

 Rivalry (Moderate): Sturm, Ruger & Company, Inc. business in Aviation / Defense Products &

Services is very competitive. This competition affects the overall long-term profit of the

organization.

5. Describe what you have determined to be competitive advantages of SR & Co.

 The company continuously invests in the research, and development of new products, diversifying

revenue.

 Market first-mover advantage and quality has been confirmed.

 The strong distribution network that Sturm, Ruger & Company, Inc. has been built.

 Reliable suppliers - It has a strong foundation of reliable raw material suppliers.

6. When launching his company, which business-level strategy did Bill Ruger adopt, and why? What

are some of the risks the firm could face by continuing to use this strategy?
 When he launched the company, Bill Ruger used a cost leadership strategy. Ruger is known for

providing high-quality products at low prices. The low-cost strategy is maintained to compete with

competitors on the price factor and it delivers growth and success for the business. But if the company

continues to use this strategy over the long term, it will lead to competition with new industry players,

causing an increase in supply prices, and lower profits in the long run.

7. Compare and contrast Sturm, Ruger & Company with its two biggest rivals, and

recommendations can you make for Ruger?

Sturm, Ruger & Co., AOBC and Remington can be compaired on the basis of valuation and stock

performance. Contrast can be done on the basis of growth and risk factors as all the three companies

have the same risk factors and provide cut throat competition to each other.

The strategic recommendations for Ruger:

 Diversify product lines, by the needs of customers, innovation will lead to increased sales.

 Contribution to social welfare is a development strategy for this sensitive industry. Because

social factors are a common threat to companies in this industry, it's good to turn threats into

growth opportunities.

8. Review the bios of board of directors.

Ruger's board of directors consists of nine people, each of whom has a unique strength in their field,

which helps the company to be developed in a comprehensive and sustainable manner. Specifically, we

can see that the chairman, and vice president have great experiences in investment and manufacturing.

CEO, with excellent management experience, with over 10 years of experience in the position of CEO.

9. Financial health of Sturm, Ruger & Company.

Estimated sales in 2020 increased 44% compared to 2019. New products represented $ 111.2 million or

22% of firearms sales in 2020, compared to $ 102.0 million or 26% of firearms sales in 2019. The

Company's finished goods inventory decreased by 58,600 units during 2020. The gross margin was

33.7% in 2020. This Assembly an increase from 24.3% in 2019.

It seems that the appropriate strategies proposed by the company have worked effectively with the

world socio-economic situation changing due to the effects of the pandemic.

With the above financial indicators, if there is a chance, I will invest in the company. However, I will

invest in small amounts, because I love to invest in the short term, and I am really concerned about

political and social issues, which can quickly affect companies. gun industry.

References:

Hitt, M. A., Ireland, D. R., & Hoskisson, R. E. (2019). Strategic Management: Concepts and Cases:

Competitiveness and Globalization (MindTap Course List) (13th ed.,198–210) [E-book]. Cengage Learning.

https://ebooks.cenreader.com

J.Dothan, R. (2018). Sturm, Ruger & Co. and the Business of Guns SWOT Analysis & Matrix / MBA

Resources. EMBAPRO. https://embapro.com/frontpage/swotcase/13511-ruger-sturm

Fern Fort University. (n.d.). Sturm, Ruger & Company, Inc. SWOT Analysis / Matrix.

http://fernfortuniversity.com/term-papers/swot/nyse/2452-sturm--ruger---company--inc-.php

Sturm, Rugers & Co, Inc. (n.d.). 10K Reports. Sturm, Rugers & Co, Inc.

https://www.ruger.com/corporate/PDF/10K-2020.pdf